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To: Alok Sinha who wrote (47440)5/22/1998 7:07:00 PM
From: stilts  Respond to of 61433
 
Whoever was writing those calls may not be fully hedged, but they are likely covered to some extent ( such as, for example, by holding the underlying shares or by holding options of another strike price.)

Market makers will hedge "dynamically", by buying shares to cover calls they've written as the price of the shares moves closer to the strike price of the options they've written.

stilts